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Oil rises again, nears $107 on Iraq fighting

The Associated Press

Posted:
06/13/2014 12:34:31 AM MDT

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In this still image posted on a militant Twitter account on Wednesday, June 11, 2014, which has been authenticated based on its contents and other AP reporting, militants parade down a main road in Mosul, Iraq. Iraqi officials say al-Qaida-inspired militants who this week seized much of the country's Sunni heartland have pushed into an ethnically mixed province northeast of Baghdad, capturing two towns there.(AP Photo/militant source via Twitter)

The price of oil rose near $107 a barrel Friday, as Iraq's widening insurgency fueled concerns that crude supplies from OPEC's No. 2 producer could be slowed.

After jumping over $2 on Thursday, the benchmark U.S. oil contract for July delivery rose 38 cents to close at $106.91 in New York. For the week, the U.S. benchmark rose 4.1 percent.

Brent crude, a benchmark for international oils used by many U.S. refineries, gained 39 cents to close at $113.41 a barrel in London. Brent rose 4.4 percent this week.

Oil prices have risen to 10-month highs after an al-Qaida-inspired group capturing two key Iraqi cities this week, including Mosul, which is in an area that is a key gateway for the country's crude. The group has vowed to march on Baghdad.

The violence in Iraq is mostly centered in the country's north, away from the major oil-producing regions of the south. The turmoil hasn't yet slowed exports, though it raises concerns about whether Iraq can continue rebuilding its oil infrastructure and boost output to meet global demand.

"Without the oil production from the south of Iraq, the market would be stripped of an estimated 2.5 million barrels per day," said a report from analysts at Commerzbank in Frankfurt. "The sharp price rise in the last two days shows that this oil supply is no longer viewed as secure, either."

Iraq's oil production has risen by about a fifth since 2011 to 3.3 million barrels per day, making it the second biggest producer in OPEC behind Saudi Arabia.

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